IB 

Union Calendar No. 391 

114TH CONGRESS 

2D SESSION H. R. 4293 

[Report No. 114–511] 

To amend the Employee Retirement Income Security Act of 1974 to ensure 

that retirement investors receive advice in their best interests, and for 

other purposes. 

IN THE HOUSE OF REPRESENTATIVES 

DECEMBER 18, 2015 

Mr. ROE of Tennessee (for himself, Mr. NEAL, Mr. ROSKAM, Mr. LARSON of 

Connecticut, Mr. CARTER of Georgia, and Mr. DAVID SCOTT of Georgia) 

introduced the following bill; which was referred to the Committee on 

Education and the Workforce 

APRIL 20, 2016 

Additional sponsors: Ms. MICHELLE LUJAN GRISHAM of New Mexico, Mr. 

REED, Mr. YOUNG of Indiana, Mr. BYRNE, Mr. BOUSTANY, Mr. WILSON

of South Carolina, Mr. CLAY, Mr. HOLDING, Mr. RENACCI, Ms. JENKINS

of Kansas, Mrs. WALORSKI, Mr. MACARTHUR, Mr. PAULSEN, Mr. 

ASHFORD, Mr. ZINKE, Mr. DUNCAN of Tennessee, Mr. THOMPSON of 

Pennsylvania, Mr. GIBBS, Mr. GUTHRIE, Mr. BISHOP of Michigan, Mr. 

TIBERI, Mr. MEEHAN, Mr. NUNES, Mr. REICHERT, Mr. ALLEN, Mr. 

BARLETTA, Mr. MARCHANT, Mr. OLSON, Mr. CRAMER, Mr. LATTA, Mr. 

AMODEI, Mr. GOHMERT, and Mr. SESSIONS

APRIL 20, 2016 

Reported with an amendment, committed to the Committee of the Whole 

House on the State of the Union, and ordered to be printed 

[Strike out all after the enacting clause and insert the part printed in italic] 

[For text of introduced bill, see copy of bill as introduced on December 18, 2015] 


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A BILL 

To amend the Employee Retirement Income Security Act 

of 1974 to ensure that retirement investors receive advice 

in their best interests, and for other purposes. 


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1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Affordable Retirement 

5 Advice Protection Act’’. 

6 SEC. 2. PURPOSE. 

7 The purpose of this Act is to provide that advisors 

8 who— 

9 (1) provide advice that is impermissible under 

10 the prohibited transaction provisions under section 

11 406 of the Employee Retirement Income Security Act 

12 of 1974, or 

13 (2) breach the best interest standard for the pro14 vision of investment advice, 

15 are subject to liability under the Employee Retirement In16 come Security Act of 1974. 

17 SEC. 3. RULES RELATING TO THE PROVISION OF INVEST18 MENT ADVICE. 

19 (a) AMENDMENTS TO THE EMPLOYEE RETIREMENT

20 INCOME SECURITY ACT OF 1974.— 

21 (1) DEFINITION OF INVESTMENT ADVICE.—Sec22 tion 3(21) of the Employee Retirement Income Secu23 rity Act of 1974 (29 U.S.C. 1002(21)) is amended by 

24 adding at the end the following: 


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1 ‘‘(C)(i) For purposes of clause (ii) of subparagraph 

2 (A), the term ‘investment advice’ means a recommendation 

3 that— 

4 ‘‘(I) relates to— 

5 ‘‘(aa) the advisability of acquiring, holding, 

6 disposing, or exchanging any moneys or other 

7 property of a plan by the plan, plan partici8 pants, or plan beneficiaries, including any rec9 ommendation whether to take a distribution of 

10 benefits from such plan or any recommendation 

11 relating to the investment of any moneys or 

12 other property of such plan to be distributed 

13 from such plan; 

14 ‘‘(bb) the management of moneys or other 

15 property of such plan, including recommenda16 tions relating to the management of moneys or 

17 other property to be distributed from such plan; 

18 or 

19 ‘‘(cc) the advisability of retaining or ceas20 ing to retain a person who would receive a fee 

21 or other compensation for providing any of the 

22 types of advice described in this subclause; and 

23 ‘‘(II) is rendered pursuant to— 

24 ‘‘(aa) a written acknowledgment of the obli25 gation of the advisor to comply with section 404 


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1 with respect to the provision of such rec2 ommendation; or 

3 ‘‘(bb) a mutual agreement, arrangement, or 

4 understanding, which may include limitations 

5 on scope, timing, and responsibility to provide 

6 ongoing monitoring or advice services, between 

7 the person making such recommendation and the 

8 plan that such recommendation is individualized 

9 to the plan and such plan intends to materially 

10 rely on such recommendation in making invest11 ment or management decisions with respect to 

12 any moneys or other property of such plan. 

13 ‘‘(ii) For purposes of clause (i)(II)(bb), any disclaimer 

14 of a mutual agreement, arrangement, or understanding 

15 shall only state the following: ‘This information is not indi16 vidualized to you, and you are not intended to materially 

17 rely on this information in making investment or manage18 ment decisions.’. Such disclaimer shall not be effective un19 less such disclaimer is in writing and is communicated in 

20 a clear and prominent manner and an objective person 

21 would reasonably conclude that, based on all the facts and 

22 circumstances, there was not a mutual agreement, arrange23 ment, or understanding. 

24 ‘‘(iii) For purposes of clause (i)(II)(bb), information 

25 shall not be considered to be a recommendation made pursuVerDate Sep 11 2014 20:58 Apr 20, 2016 Jkt 059200 PO 00000 Frm 00005 Fmt 6652 Sfmt 6203 E:\BILLS\H4293.RH H4293

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1 ant to a mutual agreement, arrangement, or understanding, 

2 and such information shall contain the disclaimer required 

3 by clause (ii), if— 

4 ‘‘(I) it is provided in conjunction with full and 

5 fair disclosure in writing to a plan, plan participant, 

6 or beneficiary that the person providing the informa7 tion is doing so in its marketing or sales capacity, 

8 including any information regarding the terms and 

9 conditions of the engagement of the person providing 

10 the information, and that the person is not intending 

11 to provide investment advice within the meaning of 

12 this subparagraph or to otherwise act within and 

13 under the obligations of the best interest standard as 

14 described in this subparagraph; 

15 ‘‘(II) the person providing the information is a 

16 counterparty or service provider to the plan in con17 nection with any transaction based on the informa18 tion (including a service arrangement, sale, purchase, 

19 loan, bilateral contract, swap (as defined in section 

20 1a of the Commodity Exchange Act (7 U.S.C. 1a)), or 

21 security-based swap (as defined in section 3(a) of the 

22 Securities Exchange Act (15 U.S.C. 78c(a)))), but 

23 only if— 

24 ‘‘(aa) the plan is represented, in connection 

25 with such transaction, by a plan fiduciary that 


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1 is independent of the person providing the infor2 mation, and, except in the case of a swap or se3 curity-based swap, independent of the plan spon4 sor; and 

5 ‘‘(bb) prior to such transaction, the inde6 pendent plan fiduciary represents in writing to 

7 the person providing the information that it is 

8 aware that the person has a financial interest in 

9 the transaction and that it has determined that 

10 the person is not intending to provide investment 

11 advice within the meaning of this subparagraph 

12 or to otherwise act as a fiduciary to the plan 

13 subject to section 404; 

14 ‘‘(III) the person providing the information is 

15 an employee of any sponsoring employer or employee 

16 organization who provides the information to the 

17 plan for no fee or other compensation other than the 

18 employee’s normal compensation; 

19 ‘‘(IV) the person providing the information dis20 closes in writing to the plan fiduciary that the person 

21 is not undertaking to provide investment advice as a 

22 fiduciary to the plan subject to section 404 and the 

23 information consists solely of— 

24 ‘‘(aa) making available to the plan, without 

25 regard to the individualized needs of the plan, 


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1 securities or other property through a platform 

2 or similar mechanism from which a plan fidu3 ciary may select or monitor investment alter4 natives, including qualified default investment 

5 alternatives, into which plan participants or 

6 beneficiaries may direct the investment of assets 

7 held in, or contributed to, their individual ac8 counts; or 

9 ‘‘(bb) in connection with a platform or 

10 similar mechanism described in item (aa)— 

11 ‘‘(AA) identifying investment alter12 natives that meet objective criteria specified 

13 by the plan, such as criteria concerning ex14 pense ratios, fund sizes, types of asset, or 

15 credit quality; or 

16 ‘‘(BB) providing objective financial 

17 data and comparisons with independent 

18 benchmarks to the plan; 

19 ‘‘(V) the information consists solely of valuation 

20 information; or 

21 ‘‘(VI) the information consists solely of— 

22 ‘‘(aa) information described in Department 

23 of Labor Interpretive Bulletin 96–1 (29 C.F.R. 

24 2509.96–1, as in effect on January 1, 2015), re25 gardless of whether such education is provided to 


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1 a plan or plan fiduciary or a participant or 

2 beneficiary; 

3 ‘‘(bb) information provided to participants 

4 or beneficiaries regarding the factors to consider 

5 in deciding whether to elect to receive a distribu6 tion from a plan or an individual retirement 

7 plan (as defined in section 7701(a)(37) of the In8 ternal Revenue Code of 1986) and whether to roll 

9 over such distribution to a plan or an individual 

10 retirement plan (as defined in section 

11 7701(a)(37) of the Internal Revenue Code of 

12 1986), so long as any examples of different dis13 tribution alternatives are accompanied by all 

14 material facts and assumptions on which the ex15 amples are based; or 

16 ‘‘(cc) any additional information treated as 

17 education by the Secretary.’’. 

18 (2) EXEMPTION RELATING TO INVESTMENT AD19 VICE.—Section 408(b) of the Employee Retirement 

20 Income Security Act of 1974 is amended by adding 

21 at the end the following: 

22 ‘‘(21)(A) Any transaction, including a contract 

23 for service, between a person providing investment ad24 vice described in section 3(21)(A)(ii) and the advice 

25 recipient in connection with such investment advice, 


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1 and any transaction consisting of the provision of 

2 such investment advice, if the following conditions are 

3 satisfied: 

4 ‘‘(i) No more than reasonable compensation 

5 is paid (as determined under section 408(b)(2)) 

6 for such investment advice. 

7 ‘‘(ii) If the investment advice is based on a 

8 limited range of investment options (which may 

9 consist, in whole or in part, of proprietary prod10 ucts), such limitations shall be clearly disclosed 

11 to the advice recipient prior to any transaction 

12 based on the investment advice in the form of a 

13 notice that only states the following: ‘This rec14 ommendation is based on a limited range of in15 vestment options, and the same or similar in16 vestments may be available at a different cost 

17 (greater or lesser) from other sources.’. 

18 ‘‘(iii) If the investment advice may result in 

19 variable compensation to the person providing 

20 the investment advice (or any affiliate of such 

21 person), the receipt of such compensation shall be 

22 clearly disclosed to the advice recipient prior to 

23 any transaction based on the investment advice. 

24 For purposes of this subparagraph, clear disclo25 sure of variable compensation shall include, in a 


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1 manner calculated to be understood by the aver2 age individual, each of the following: 

3 ‘‘(I) A notice that states only the fol4 lowing: ‘This recommendation may result 

5 in varying amounts of fees or other com6 pensation to the person providing the rec7 ommendation (or its affiliate), and the 

8 same or similar investments may be avail9 able at a different cost (greater or lesser) 

10 from other sources.’. Any regulations or ad11 ministrative guidance implementing this 

12 subclause may not require this notice to be 

13 updated more than annually. 

14 ‘‘(II) A description of any fee or other 

15 compensation that is directly or indirectly 

16 payable to the person (or its affiliate) by 

17 the advice recipient with respect to such 

18 transaction (expressed as an amount, for19 mula, percentage of assets, per capita 

20 charge, or estimate or range of such com21 pensation). 

22 ‘‘(III) A description of the types and 

23 ranges of any compensation that may be di24 rectly or indirectly payable to the person 

25 (or its affiliate) by any third party in conVerDate Sep 11 2014 20:58 Apr 20, 2016 Jkt 059200 PO 00000 Frm 00011 Fmt 6652 Sfmt 6203 E:\BILLS\H4293.RH H4293

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1 nection with such transaction (expressed as 

2 an amount, formula, percentage of assets, 

3 per capita charge, or estimate or range of 

4 such compensation). 

5 ‘‘(IV) Upon request of the advice re6 cipient, a disclosure of the specific amounts 

7 of compensation described in clause (iii) 

8 that the person will receive in connection 

9 with the particular transaction (expressed 

10 as an amount, formula, percentage of assets, 

11 per capita charge, or estimate of such com12 pensation). 

13 ‘‘(B) No recommendation will fail to satisfy the 

14 conditions described in clauses (i) through (iii) of 

15 subparagraph (A) solely because the person, acting in 

16 good faith and with reasonable diligence, makes an 

17 error or omission in disclosing the information speci18 fied in such clauses, provided that the person discloses 

19 the correct information to the advice recipient as soon 

20 as practicable, but not later than 30 days from the 

21 date on which the person knows of such error or omis22 sion. 

23 ‘‘(C) Any notice provided pursuant to a require24 ment under clause (ii) or clause (iii)(I) of subpara25 graph (A) shall have no effect on any other notice othVerDate Sep 11 2014 20:58 Apr 20, 2016 Jkt 059200 PO 00000 Frm 00012 Fmt 6652 Sfmt 6203 E:\BILLS\H4293.RH H4293

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1 erwise required without regard to this title, and shall 

2 be provided in addition to, and not in lieu of, any 

3 other such notice. 

4 ‘‘(D) For purposes of this paragraph, the term 

5 ‘affiliate’ has the meaning given in subsection 

6 (g)(11)(B).’’. 

7 (b) EFFECTIVE DATE.— 

8 (1) MODIFICATION OF CERTAIN RULES, AND

9 RULES AND ADMINISTRATIVE POSITIONS PROMUL10 GATED BEFORE ENACTMENT BUT NOT EFFECTIVE ON

11 JANUARY 1, 2015, PROHIBITED.—The Department of 

12 Labor is prohibited from amending any rules or ad13 ministrative positions promulgated under, or applica14 ble for purposes of, section 3(21) of the Employee Re15 tirement Income Security Act of 1974 (including De16 partment of Labor Interpretive Bulletin 96–1 (29 

17 C.F.R. 2509.96–1) and Department of Labor Advi18 sory Opinion 2005–23A), and no such rule or admin19 istrative position promulgated by the Department of 

20 Labor prior to the date of the enactment of this Act 

21 but not effective on January 1, 2015, may become ef22 fective unless a bill or joint resolution referred to in 

23 paragraph (3) is enacted as described in such para24 graph not later than 60 days after the date of the en25 actment of this Act. 


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1 (2) GENERAL EFFECTIVE DATE OF AMEND2 MENTS.—Except as provided in paragraph (3), the 

3 amendments made by subsection (a) of this section 

4 shall take effect on the 61st day after the date of the 

5 enactment of this Act and shall apply with respect to 

6 information provided or recommendations made on or 

7 after 2 years after the date of the enactment of this 

8 Act. 

9 (3) EXCEPTION.—If a bill or joint resolution is 

10 enacted prior to the 61st day after the date of the en11 actment of this Act that specifically approves any 

12 rules or administrative positions promulgated under, 

13 or applicable for purposes of, section 3(21) of the Em14 ployee Retirement Income Security Act of 1974 that 

15 are not in effect on January 1, 2015, the amendments 

16 made by subsection (a) of this section shall not take 

17 effect. 

18 (c) GRANDFATHERED TRANSACTIONS AND SERV19 ICES.—The amendments made by subsection (a) shall not 

20 apply to any service or transaction rendered, entered into, 

21 or for which a person has been compensated prior to the 

22 date on which the amendments made by subsection (a) of 

23 this Act become effective under subsection (b)(2). 

24 (d) TRANSITION.—If the amendments made by sub25 section (a) of this section take effect, then nothing in this 


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1 section shall be construed to prohibit the issuance of guid2 ance to carry out such amendments so long as such guid3 ance is necessary to implement such amendments. Until 

4 such time as regulations or other guidance are issued to 

5 carry out such amendments, a plan or a fiduciary shall 

6 be treated as meeting the requirements of such amendments 

7 if the plan or fiduciary, as the case may be, complies with 

8 a reasonable good faith interpretation of such amendments. 


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Union Calendar No. 391 

114TH CONGRESS 

2D SESSION H. R. 4293 

[Report No. 114–511] 

A BILL 

To amend the Employee Retirement Income Secuother purposes. tors receive advice in their best interests, and for rity Act of 1974 to ensure that retirement invesAPRIL 20, 2016 

Reported with an amendment, committed to the Comand ordered to be printed mittee of the Whole House on the State of the Union, 


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